Australian investors will be left exposed to unregulated markets and investments will be driven away from the country if the Digital Assets (Market Regulation) Bill is rejected by parliament, the bill’s author Senator Andrew Bragg has warned.
On Sept. 4, the Senate Committee on Economics Legislation recommended the Senate reject Bragg’s bill and suggested the government instead continue to consult the industry on developing crypto regulation.
The Committee’s chair, Labor Party Senator Jess Walsh, wrote in a report that it recommended the bill not be passed as it “fails to interoperate with the established regulatory landscape, creating a genuine concern for regulatory arbitrage and adverse outcomes to the industry.”
In emailed comments to Cointelegraph, Bragg criticized the committee’s recommendation, saying it would “expose consumers to an unregulated market, and drive investment offshore.”
“The benefits of digital asset regulations are twofold: They protect consumers and promote market investment and activity. This was why these regulations were placed on the legislative agenda by the former Liberal government in October 2021.”
Bragg perceived the rejection of his bill as largely motivated by partisanship due to the number of Labor Party members presiding on the Senate Committee. He slammed their decision to oppose his draft bill, claiming it “stalled the implementation of digital asset regulations in Australia.”
“Australia would have a regulated digital assets market. Instead, it is close to the end of 2023, and the government has no plan to implement these regulations,” Bragg said.
While Bragg blamed partisan politics, Liam Hennessey, partner at international law firm Clyde & Co., told Cointelegraph the rejection had more to do with a separate regulatory process — specifically the Treasury’s consultation paper on the government’s “token mapping” exercise.
Hennessey said the recommended rejection of Bragg’s draft bill was “neither good nor bad” for crypto regulation in Australia.
“There’s no doubt that Senator Bragg’s bill and the consideration and industry feedback it has received will be considered,“ he said. “The Senate is congested with legislation more broadly at present, so I do not think the delay is something that can be read into too much.”
“I think [Bragg’s] bill, and the work that went into it, will be valuable in informing the government’s approach,” Hennessey concluded.
Last August the Labor government announced its token mapping exercise, which used the Treasury to “identify how crypto assets and related services should be regulated” and inform future regulatory decisions.
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On Feb. 3, the Treasury released a public consultation paper on the exercise, announcing it as a foundational step in the government’s plan to regulate the digital asset market.
Since then, there’s been little mention of digital assets or the broader approach to regulating them from the government.
Bragg first introduced the Digital Assets (Market Regulation) Bill 2023 in March with the aim to “protect consumers and promote investors.”
The bill provides recommendations for regulating stablecoins, licensing exchanges and custody requirements.
The bill is before the Senate and is expected to be voted on during the next sitting session.
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Additional reporting by Helen Partz.